Price Gouging – California Penal Code 396 PC

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California Penal Code 396 PC — Price Gouging Laws and Penalties

Price gouging is a criminal offense in California that occurs when a business or individual raises prices on essential goods or services by more than 10 percent above pre-emergency levels during a declared state of emergency. The California Attorney General’s Office, district attorneys, and city attorneys actively monitor pricing during emergencies and pursue both criminal and civil charges against those who violate Penal Code 396 PC. Each individual overcharge can be prosecuted as a separate count meaning the exposure multiplies quickly depending on how many transactions are at issue. Businesses and individuals charged under PC 396 face up to one year in county jail per count, fines up to $10,000 per count, and significant civil liability on top of the criminal case. At The Law Offices of Arash Hashemi our criminal defense attorney has over 20 years of experience defending clients against fraud and consumer protection charges throughout Los Angeles. Call (310) 448-1529 or contact our office today for a free confidential consultation.

What Is California Penal Code 396 PC?

Penal Code 396 PC prohibits sellers of essential goods and services from raising prices by more than 10 percent above pre-emergency levels during or after a declared state of emergency. The statute applies as soon as an emergency is declared by the governor or local officials and the pricing restrictions remain in effect for at least 30 days after the declaration, or 180 days for housing-related price increases.

The law covers essential goods and services including food, water, fuel, medical supplies, emergency services, and rental housing. It applies to retailers, wholesalers, landlords, and anyone else who sells or offers to sell covered goods or services during the covered period. Attempts to circumvent the 10 percent limit by adding hidden fees, reducing product sizes while maintaining prices, or reclassifying goods to avoid coverage are all treated as violations under PC 396.

One important aspect of Penal Code 396 PC is that a business can raise prices by more than 10 percent if it can demonstrate that the increase was directly caused by higher costs from its own suppliers. But the burden falls on the seller to prove that justification with clear documentation. Without it the price increase is presumed to be a violation.

What the Prosecution Must Prove Under Penal Code 396 PC

To convict someone of price gouging the prosecution must establish every one of the following elements beyond a reasonable doubt. If even one element cannot be proven the charge cannot stand and our firm analyzes each one from the outset and challenges every element where the evidence gives us grounds to do so:

  • A state of emergency was declared by the governor or local officials and the alleged price increase occurred during or shortly after that declaration
  • The defendant was selling or offering to sell essential goods or services covered by the statute including food, fuel, housing, medical supplies, or emergency services
  • The price charged exceeded 10 percent above the pre-emergency price for that good or service
  • The seller had no valid cost justification for the increase — if clear documentation showing higher supplier costs cannot be produced the increase is presumed to be illegal
  • In some cases prosecutors also argue the defendant knowingly exploited the emergency for financial gain though PC 396 is generally a strict liability offense meaning intent is not always required

Penalties under Penal Code 396 PC

Price gouging is a misdemeanor offense but the penalties are significant and the exposure multiplies quickly because each individual overcharge can be prosecuted as a separate count.

Criminal Penalties:

  • Up to one year in Los Angeles County Jail per count
  • Fines up to $10,000 per count
  • Misdemeanor probation
  • A permanent criminal record

Civil Penalties:

  • Civil fines up to $2,500 per violation under California’s Unfair Competition Law
  • Consumer lawsuits seeking refunds, damages, and attorney fees
  • Injunctions restricting or shutting down future business operations
  • Government-initiated civil actions by the Attorney General, district attorneys, or city attorneys

How Price Gouging Investigations Develop in Los Angeles

Price gouging cases in California begin with consumer complaints filed with the Attorney General’s Office, district attorneys, or local city attorneys. Once a complaint is received investigators move quickly. They compare pre-emergency prices to post-emergency prices using receipts, invoices, and transaction records. They also monitor online listings, visit retail locations, and in some cases conduct undercover purchases to document the alleged overcharge.

Prosecutors can subpoena your business records, supply chain invoices, and internal communications to determine whether you had a legitimate cost-based justification for any price increase. When they find pricing records that show increases exceeding 10 percent without documented cost justification they treat that as sufficient evidence to file charges. The earlier a criminal defense attorney gets involved the more opportunity exists to present the supplier documentation, cost records, and business context that can prevent or defeat the charge.

Legal Defenses Against Price Gouging Charges

The Price Increase Was Justified by Higher Costs
If a business raised prices due to increased costs for goods, transportation, or labor, this may serve as a valid defense. Penal Code 396 allows price increases if they are directly tied to a supplier’s price hike rather than an attempt to take advantage of an emergency.

No State of Emergency Was in Effect
Price gouging laws only apply during a declared state of emergency and for a limited period afterward. If the alleged overpricing happened before or after the legally defined timeframe, the charges may not be valid.

The Product or Service Was Not Covered by Price Gouging Laws
Penal Code 396 applies to essential goods and services, including food, fuel, medical supplies, housing, and emergency services. If the item in question does not fall under the statute, the charges may not hold up in court.

The Alleged Price Increase Did Not Exceed Legal Limits
The law prohibits price increases of more than 10% above pre-emergency levels unless justified by increased costs. If the price increase was within legal limits, the case could be dismissed.

Lack of Intent to Overcharge
Price gouging typically involves willful price inflation to exploit a crisis. If a pricing error or miscommunication led to the alleged violation, it may be possible to argue that there was no intent to engage in unlawful business practices

Contact a Los Angeles Criminal Defense Attorney for Price Gouging Charges

If you are facing price gouging charges in Los Angeles, the consequences can be severe. A conviction could result in criminal penalties, civil lawsuits, and damage to your business and reputation. Prosecutors aggressively pursue these cases, and waiting to act could limit your legal options.

With over 20 years of experience, Attorney Hashemi has successfully defended business owners and individuals against complex criminal charges. Our firm understands how these cases are prosecuted and will work to challenge weak evidence, protect your rights, and fight for a dismissal or reduced penalties. We are conveniently located in the Westside Towers serving clients facing price gouging and consumer fraud charges across Los Angeles, Beverly Hills, Santa Monica, the San Fernando Valley, Long Beach, and all surrounding communities. Your defense starts the moment you call.

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